Indian pharma industry could face U.S. sanctions

The acrimonious U.S.-India exchange with regard to trade relations could degenerate with the news that the U.S. could designate India a ‘Priority Foreign Country’ (PFC) or even the more stringent ‘Foreign Country Watch List’ inviting unilateral trade sanctions.

The pharmaceutical sector is one of the targets and contentious issues include India’s granting domestic companies compulsory licences (CL) and refusing ‘evergreening’ of patents by multinational companies (MNCs) under Section 3 (d) of the Indian Patents Act 1970. When companies are closing in on the expiry of the 20-year run for a patent, they tweak the formula of the drug and seek a new licence as a new product thus ‘evergreening’ the patent. In 2013, Bayer and Novartis’ patent applications were rejected for their respective cancer drugs Nexavar and Glivec and Novartis said it would stop its R&D spend in India.

Public hearings

This month, the United States International Trade Commission (USITC) is having public hearings in Washington DC as part of its investigation titled “Trade, investment and industrial policies in India: Effects on the U.S. economy”.

Industry associations from India, including National Association of Software and Service Companies (Nasscom), Indian Pharmaceutical Alliance (IPA) and public interest groups like Doctors without Borders have appeared before it.

The decision is expected in two months.

Speaking to The Hindu, D. G. Shah, Secretary-General, IPA, who appeared before the USITC, said, “thankfully, Indian industry is more proactive and despite the threat of sanctions, Indian government has shown a lot of spine in taking on the multinationals”. Mr. Shah said that since 2005, when India implemented the TRIPS (Trade Related aspects of Intellectual Property Rights), “over 1,500 patents were granted to the top nine global pharmaceutical companies alone, for products and compositions, apart from patents for manufacturing processes”.

Compulsory licensing is widely used and 90 per cent of HIV /AIDS drugs used to treat more than 10 million patients in developing countries are sourced from India as Indian prices are often a fraction of U.S. prices.

The U.S. accounts for 30 per cent of India’s pharmaceutical exports of $13 billion and this is growing at 18-20 per cent per annum. “In all this, the U.S. and U.S. consumers could end up being the loser,” Mr. Shah said.